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Young Guns: How to Keep Valuable New Employees for the Long Term

To retain the next generation of advisors, today’s firm owners need to step up

A recent story in the July/August issue of the Harvard Business Review received national attention. Researchers Monika Hamori, Jie Cao and Burak Koyuncu conducted face-to-face interviews with some 1,200 “high-achiever” 30-something employees. They found that “three-quarters sent out résumés, contacted search firms and interviewed for jobs at least once a year during their first employment stint. Nearly 95% regularly engaged in related activities such as updating résumés and seeking information on prospective employers.” Worse, “they left their companies, on average, after 28 months.”

This didn’t come as much of a surprise to me. As a member of the 30-something crowd myself, and after working with hundreds of similar employees, I’m fully aware that the experience of today’s young employees is vastly different from that of their employers and older peers. Owner/advisors who understand these differences and use them to their advantage have a far greater chance of attracting and retaining the high-achieving young financial planners of this generation.

For one thing, social media has made finding new jobs easier than ever before. New job postings, hirings and firings in every industry go viral at a speed that would boggle the minds of most baby boomers. The independent advisory community is no exception. Keeping track of the job market—and occasionally testing it—is as much a part of the lives of today’s young advisors as buying the newest Beatles album (whatever that is) was for the older generation.

What’s more, against this backdrop of at least the appearance of non-stop opportunity, today’s young advisors more often than not find themselves in jobs so far behind their digital world that it’s very easy for them to become frustrated and disengaged. Through my work with the Kansas State University financial planning program, I’ve come to realize that today’s students are even learning in a different way than I did only a decade (or so) ago. Today’s students don’t simply take their teachers’ word for facts: They’ll Google it and challenge the teacher in real time. The Internet has made information so readily available to them that it doesn’t have much value anymore: how to use it or apply it is what holds their interest now. To retain them at an advisory firm, owner/advisors need to take this into consideration.

For example, we recently hired a Kansas State graduate in one of my client firms. She’d made straight A’s and was at the top of her financial planning class. Unknown to me, in her first week of work, my client decided she wanted her new employee to become an expert in IRA conversions so she could work directly with clients, telling her so and giving her a book to read on the laws and rules governing getting benefits.

Rather than read the book, this young advisor Googled “IRA conversions” and read about them from many sources including the government itself, realizing along the way that the book she’d been given was seriously out of date in a number of key areas. When she presented her findings, rather than test what she’d learned, her boss became outraged that she hadn’t read the book, demanding that she do so and write a “book report” on it—a book report!

Let’s see how many mistakes you can spot that the owner/advisor made in this example: I count five. Her first mistake was that she assigned an area of expertise to a young advisor (or anyone) without getting the advisor’s buy-in. If you need a junior advisor to do some research, that’s one thing. To have someone become an expert in a particular area—financial planning, investments, taxes, retirement, insurance, etc.—you’d better find out if it’s something they have an interest in. Without that, how much of an expert do you think they’ll become? Equally as important, how happy do you think they’ll be doing it? I’m hard-pressed to think of a faster way to get a young advisor looking for a new job.

Of course, since the owner/advisor in question sprung this area of expertise on her new employee, we can reasonably assume it did not come up in the hiring process (actually, I know for sure that it didn’t). Note to owner/advisors: You just can’t make this stuff up as you go along. Some readers may wonder whether this really needs to be said, but sadly, it does: The time to think about what expertise a firm requires is before you hire a young advisor. Then you have the luxury of hiring someone with that expertise, or at least someone with an inclination to become the expert needed.

Under some (rare) circumstances, an owner/advisor may realize he or she needs to add a specific area of expertise in their firm. Economics or other realities may dictate that it would be better if one of the advisors already with the firm were to become that expert. However, becoming an expert in a given discipline is often a career-defining undertaking and quite a commitment of time and energy. Consequently, some people are understandably likely to bristle a bit at being told what their expertise will be. We’ve found it’s usually better to determine whether or not an employee wants to become an expert in a specific area, and if not, to look for other solutions for that particular need.

Then, of course, the owner/advisor in our example failed to understand that in many cases, the Internet’s massive access to information is a better resource than any book. By rigidly clinging to her book with a maternal “because I said so” mentality, the owner/advisor appeared autocratic, out of touch, old-fashioned and unconcerned with actual education on the subject—all of which caused her to lose considerable face in the eyes of her employee. Even if they don’t want to fully embrace it themselves, today’s owner/advisors need to get their brains around the tremendous resources that technology offers and accept the fact that younger employees are probably going to be able to utilize these resources more effectively. This expertise can be a huge asset to a firm if encouraged.

What’s more, the owner/advisor was so focused on having her instruction followed to the letter that she didn’t bother to actually test the knowledge her employee found on the Internet. If she had, she would have quickly realized that the young advisor gained a great deal more expertise than the book alone could have provided.

Rather than rewarding the employee for taking action that went above and beyond her assignment, the owner/advisor created an atmosphere that stifles future initiative, which results in huge limitations for the growth of any firm. It was a bad, very costly mistake that was further compounded by the demeaning book report.

I have another client who wanted his three young advisors to become experts on client service, so he too gave them a book to read and report on. When he read the reports, his response was, “That’s not how we treat clients. You don’t know what client service is.” Only someone in the firm can teach new employees how the firm does what it does. In many firms, that will be the owner/advisor. This is a major problem for many firm owners. The Harvard Business Review study showed that most young employees don’t feel that they get enough mentoring attention.

Particularly in the areas of client service, investments, financial planning and marketing, new professional employees will need to be trained on the unique ways their firm performs each of these functions. (For a simple training process, see “The Six-Week Solution to Succession Planning,” Investment Advisor, June 2012). That usually means the owner/advisor is going to have to set aside time to teach them. There is no shortcut for this. If you want new employees to work out, you need to train them effectively.

That includes letting new employees learn their way: not your way. The teacher’s only concern should be that students learn, not how they learn. Let employees ask questions, use the Internet and make mistakes—as long as they learn from them.

To attract and retain young advisors today, owner/advisors need to up their game and do three specific things: hire advisors who are a good fit for the firm, set aside time to teach them to do things the firm’s way and get out of their way. The result will be new advisors who get up to speed faster, make a greater impact on the success of their firm and who will stick around to become the next generation of older advisors.